UNICOM Wheels and Deals for Two Public Companies

June 26, 2012 Alex Woodie

UNICOM has been active in the mergers and acquisitions department over the last month. Last week, the owners of SoftLanding Systems completed the acquisition of government IT service firm GTSI for about $75 million. It also announced plans to buy server appliance maker Network Engines for about $62 million.

GTSI is based in Herndon, Virginia, and counts more than 1,700 government agencies as clients. The company, which has about 450 employees, was ranked number 73 on Washington Technology’s 2012 Top 100 list of the largest federal government contractors.

UNICOM first announced its intent for a subsidiary called UNICOM SUB ONE to acquire GTSI in a cash tender offer on May 7. The offer was for $7.75 per share of GTSI, which puts the value of the deal at $74.9 million when all 9.67 million common shares are considered. The deal was concluded quickly, as there was no requirement to hold a vote or meeting of GTSI stockholders, UNICOM says.

GTSI stock was traded on the NASDAQ Global Select Market, but trading stopped after the deal was announced on Friday. The company had revenues of $76.4 million for the most recent fiscal quarter ended March 31, and a net loss of $2.5 million. Its balance sheet showed total liabilities and shareholder equity of $142.7 million, down from $196 million at the end of September. It had no long term debt, but cash from operations had declined from $64.7 million at the end of December to $16.3 million at the end of March.

The deal for Network Engines (NEI) involved UNICOM Systems, another subsidiary of the UNICOM Group (the one that owns SoftLanding and several other companies). UNICOM has made an all cash offer of $61.8 million for all outstanding shares of the company, which is traded on NASDAQ.

NEI’s board has approved the transaction and recommends that NEI shareholders vote in favor of the transaction. Under the terms of the definitive merger agreement, the company is permitted to shop around for a better deal through July 18.

NEI, which is based in Canton, Massachusetts, reported revenues of $65.9 million and a net profit of $1.25 million for its most recent fiscal quarter ended March 31. The company had $132.2 million of total liabilities and shareholder equity at the end of the quarter, down about 7 percent from the previous quarter.